Correlation Between Franklin FTSE and Franklin Libertyshares

Can any of the company-specific risk be diversified away by investing in both Franklin FTSE and Franklin Libertyshares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin FTSE and Franklin Libertyshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin FTSE Taiwan and Franklin Libertyshares ICAV, you can compare the effects of market volatilities on Franklin FTSE and Franklin Libertyshares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin FTSE with a short position of Franklin Libertyshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin FTSE and Franklin Libertyshares.

Diversification Opportunities for Franklin FTSE and Franklin Libertyshares

0.31

Correlation Coefficient

Franklin FTSE  Franklin Libertyshares

Weak diversification

The 3 months correlation between Franklin and Franklin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Franklin FTSE Taiwan and Franklin Libertyshares ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Libertyshares and Franklin FTSE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin FTSE Taiwan are associated (or correlated) with Franklin Libertyshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Libertyshares has no effect on the direction of Franklin FTSE i.e., Franklin FTSE and Franklin Libertyshares go up and down completely randomly.

Pair Corralation between Franklin FTSE and Franklin Libertyshares

Assuming the 90 days trading horizon Franklin FTSE Taiwan is expected to generate 1.36 times more return on investment than Franklin Libertyshares. However, Franklin FTSE is 1.36 times more volatile than Franklin Libertyshares ICAV. It trades about 0.08 of its potential returns per unit of risk. Franklin Libertyshares ICAV is currently generating about 0.0 per unit of risk. If you would invest  2,298  in Franklin FTSE Taiwan on September 3, 2024 and sell it today you would earn a total of  139.00  from holding Franklin FTSE Taiwan or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Franklin FTSE Taiwan  vs.  Franklin Libertyshares ICAV

Franklin FTSE Taiwan

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin FTSE Taiwan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Franklin FTSE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Franklin Libertyshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Libertyshares ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Franklin Libertyshares is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Franklin FTSE and Franklin Libertyshares

The main advantage of trading using opposite Franklin FTSE and Franklin Libertyshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin FTSE position performs unexpectedly, Franklin Libertyshares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Libertyshares will offset losses from the drop in Franklin Libertyshares' long position.

The idea behind Franklin FTSE Taiwan and Franklin Libertyshares ICAV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.